Email this article

Two former finance executives at Conseco Inc. were fined and suspended by the Securities and Exchange Commission for their role in the company’s accounting scandal.

Rollin M. Dick, a former chief financial officer of Conseco Finance Corp., a subsidiary then known as Green Tree Financial, was ordered to pay a $110,000 civil penalty and barred for five years from acting as an officer or director of any public company.

James S. Adams, formerly chief accounting officer, treasurer, and senior vice-president of Conseco, Inc., was ordered to pay a $90,000 civil penalty and barred for five years from acting as an officer or director of a public company.

Recommended Stories:

In an amended complaint, the SEC alleged, among other things, that from March 1999 through February 2000, Conseco and Conseco Finance made false and misleading statements about their earnings in SEC filings and in public statements announcing their earnings, overstating their financial results by hundreds of millions of dollars.

The complaint alleged that this massive overstatement occurred “primarily because Dick and Adams conducted a fraudulent scheme” to avoid huge write-downs of certain assets held by Conseco Finance known as interest-only securities, and corresponding charges to earnings, through the use of improper accounting techniques in violation of generally accepted accounting principles.

The complaint also alleged that Dick and Adams made a variety of improper and unsupported “top-side” adjustments to Conseco Finance’s books and records at the end of the first three quarters of 1999 to further inflate Conseco and Conseco Finance’s earnings for these quarters in order to meet Wall Street’s analysts’ consensus earnings targets.

Also, the SEC alleged that Conseco and Conseco Finance, under the two former executives’ direction, failed to maintain a system of internal accounting controls, and that Dick and Adams were responsible for and took advantage of that failure.

The complaint also alleged that Dick and Adams made misrepresentations to Conseco and Conseco Finance’s auditors in management representation letters.